SYLLABUS
GS-3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Context: India's wholesale price inflation rose to 9.68% in May 2026 under the newly revised Wholesale Price Index (WPI) series with base year 2022-23, mainly driven by sharp increases in energy prices.
More on the News
• Alongside the revised WPI, the government introduced the Output Producer Price Index (OPPI), Trial Input Producer Price Index (IPPI), and Service Producer Price Indices (Service PPIs) for selected sectors.
• The move aims to align India's producer-price measurement framework with international best practices and IMF recommendations.
• The government has announced that WPI will continue alongside PPIs for five years before being phased out.
Key Highlights of the Findings
• WPI inflation increased to 9.68% in May 2026, up from 8.26% in April 2026.
• Fuel and Power inflation surged to 30.33%, emerging as the biggest contributor to wholesale inflation.
• Inflation in Crude Petroleum & Natural Gas rose to 61.51%, while Mineral Oils recorded 49.82% inflation.
• Manufactured Products inflation accelerated to 7.48% from 6.68% in April.
• Primary Articles inflation increased to 4.99% from 3.78%.
• The WPI Food Index rose by 4.49%, compared with 3.11% in April.
• Major drivers of inflation were Mineral Oils, Crude Petroleum & Natural Gas, Chemicals & Chemical Products, and Basic Metals.
About the Wholesale Price Index (WPI)
• WPI measures the average change in prices of goods traded at the wholesale/producer level before they reach consumers.
• It is compiled and released by the Office of the Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.
• The revised WPI series uses 2022-23 as the base year, replacing the 2011-12 series.
• It is released on a monthly basis, generally on the 14th of the following month (or next working day).
• The new basket covers 957 commodities, up from 697 commodities in the previous series.
• The index is divided into three major groups:
- Primary Articles (22.76%)
- Fuel and Power (14.11%)
- Manufactured Products (63.13%)
• Manufactured Products carry the highest weight in the index basket.
• Solar Power, Wind Power, and Nuclear Electricity have been included in the Electricity group.
• Crude Petroleum and Natural Gas have been shifted from the Primary Articles group to the Fuel and Power group for better tracking of energy prices.
• The new series uses Gross Value of Output (GVO) for assigning weights, replacing the earlier Net Traded Value approach.
• The elementary indices are now compiled using the short-term formulation method, replacing the long-term formulation method.
• Missing price observations are estimated through Targeted Mean Imputation, replacing the earlier Carry Forward Method.
• A WPI Food Index is also compiled by combining:
- Food Articles under Primary Articles, and
- Manufacture of Food Products under Manufactured Products.
• WPI covers only goods and does not include services.
About the Output Producer Price Index (OPPI)
• OPPI measures changes in prices received by producers for goods sold at the factory gate or first point of sale.
• It is compiled on a monthly basis with 2022-23 as the base year.
• Weights are derived from the Supply Table of the National Accounts Supply and Use Table (SUT).
• The All Commodities OPPI stood at 109.6 in May 2026, compared with 108.6 in April 2026.
• Major sectors covered include:
- Agriculture, Forestry and Fishing
- Mining and Quarrying
- Manufactured Products
- Electricity
• OPPI provides a more direct measure of producer-level inflation than WPI.
• OPPI is compiled using Basic Prices (factory-gate prices).
About the Trial Input Producer Price Index (IPPI)
• IPPI measures changes in prices paid by industries for inputs used in the production process.
• It is currently being published on a trial/experimental basis for the manufacturing sector.
• Weights are derived from the Use Table of the National Accounts Supply and Use Table (SUT).
• Unlike WPI and OPPI, IPPI is compiled using Purchaser's Prices, reflecting actual input costs faced by industries.
• The Manufacturing Sector IPPI stood at 104.9 in May 2026.
About the Service Producer Price Index (Service PPI)
• Service PPI measures changes in prices received by service providers.
• It is compiled on a quarterly basis and released with a lag of 55 days after the end of the reference quarter.
• Service PPI is compiled using Basic Prices.
• In the first phase, Service PPIs have been introduced for seven sectors:
- o Banking
- o Securities Transactions
- o Insurance
- o Management of Pension Funds
- o Railways
- o Air Passenger Transport
- o Telecommunications
